LEG to Expand Property Portfolio After Selling Shares to Public

By Dalia Fahmy and Christoph Rauwald -
Jan 21, 2013

LEG Immobilien AG, the German
apartment landlord planning an initial public offering next
month, will increase its portfolio by more than 10 percent in
the years ahead, Chief Executive Officer Thomas Hegel said.

LEG owns 91,000 apartments in North Rhine-Westphalia,
Germany’s most populous state, and plans to add as many as
10,000, Hegel said at a press conference today. The Dusseldorf-
based company is controlled by Goldman Sachs Group Inc. (GS)

“Our focus now is to generate growth,” Hegel said at the
briefing in Frankfurt. “North Rhine-Westphalia remains a
promising market for future growth in the long term.”

LEG plans to sell as much as 1.4 billion euros ($1.9
billion) of stock in an IPO on the Frankfurt exchange that would
be the largest by a German property company. Goldman Sachs,
which bought the company for about 3.5 billion euros including
debt in 2008, is seeking to profit from a boom in German
residential real estate. The FTSE EPRA/Nareit index of German
property stocks has gained 35 percent in the past 12 months.

The largest group of investors in next month’s IPO will
probably come from the U.K., accounting for 40 percent of the
total, said Foruhar Madjlessi, a managing director at Deutsche
Bank AG. (DBK) About 25 percent of the investors will come from the
U.S. and 15 percent from Germany, he said. Deutsche Bank and
Goldman Sachs will be lead managers.

Acquisitions will probably be financed with the company’s
existing funds, LEG Chief Financial Officer Eckhard Schultz
said. LEG plans to distribute about 65 percent of its funds from
operations as dividends, he said.